Move to individualisation requires funding flexibility

The debate about funding long-term care in Australia needs to shift to a focus on choice for older people and their carers.

Australia’s aged-care and disability service systems are moving away from block or program funding to individualised funding. These reforms are raising questions about how government will fund social care for seniors, people with a disability and their carers in Australia. At the centre of these reform processes are the people who use social care services.

There are differences between the funding of disability services and aged-care services in Australia. The National Disability Insurance Scheme is an insurance model with limited contribution to the costs of care from people who use it. The NDIS is funded from existing contributions from states and territories, additional Australian Government funding, as well as through a rise in the Medicare levy that was legislated by the Gillard Labor government in May 2013. In contrast, aged and community care services are funded through general revenue and contributions from the older people who use them. There is an inbuilt policy assumption by the Australian Government that older people can and should pay more to the costs of their support as they age.

The aim of both the NDIS and the aged-care system is to promote inclusion and the participation of people in their communities, including supporting older people in ageing well. Yet the two systems are different. This raises the question of whether the Australian Government is creating a two-tiered system for people with disability, older people and people with disability who are ageing.

Framing of social care challenges in Australia

The issues of disability and ageing, and the government’s responsibility in funding systems of support, were framed differently in the Productivity Commission reports in 2011. In Disability, Care and Support 2011, the commission acknowledged the neglect of disability policy and that the current disability support system is “underfunded, unfair, fragmented, and inefficient, and gives people with a disability little choice and no certainty of access to appropriate supports”. The rationale for NDIS was to provide reasonable long-term supports for people with a long-term disability, to minimise the impact of disability and to promote the inclusion of people in Australian society.

The Productivity Commission advocated the creation of a three-tiered system. Tier one was for all Australians; tier two was for anyone with disability or supporting a person with disability to access information and support; and tier three was for people with disability with needs for care and support. The report recommended that the NDIS should be fully funded by government with no means testing.

On the other hand, the Productivity’s Commission report on older people, Caring for Older Australians (2011) acknowledged “weakness” in the aged-care system with limited choice and control for older people. The report stated the “aged care system suffers key weaknesses. It is difficult to navigate. Services are limited, as is consumer choice. Quality is variable. Coverage of needs, pricing, subsidies and user contributions are inconsistent or inequitable.” It framed solutions in terms of reform by ‘layering’ and argued for older people to have choice and control while – in contrast to the NDIS recommendations – increasing their contributions to the costs of care and uncapping the supply of aged-care services.

The Productivity Commission’s framing of the issues has set the policy parameters for the creation of two different types of social care systems in Australia. For older people and particularly older people with disability, the impact of these two systems poses questions about how they can access the appropriate support to allow them to age well in their communities.

Benefits of social insurance schemes

The issue of social insurance and funding long-term care for older people was subject to debate in Australia during the late 1990s and early 2000s. Proponents of social insurance argued that it is universal, with no problems of adverse selection – meaning no outsized risk for the insurer – and can provide greater security of funding for older people. However, social insurance schemes for older people were not politically popular within the Australian Government during this time. Perhaps this resistance has now shifted with the funding and launch of the NDIS, which is framed as an insurance system to support the participation and inclusion in society of people with disability.

One of the strengths of the NDIS is the flexibility of the scheme for participants in how they manage their funding. People can choose to self-manage or use a budget holder model. Although the number of people who are choosing to self-manage is much lower than expected (with only 2 per cent of participants in the Hunter NSW trial site self-managing their plans) participants do have the option. This trend reflects other countries, including the UK, where the take up of self-management was initially low. Initiatives to build the skills and capabilities of people to manage their own funding are critical.

In contrast, the current funding of aged and community care does not allow the flexibility or a self-managed option for older people and their care partners. Funding is still attached to providers, reflecting the historical institutional funding of aged and community care in Australia. The implementation of consumer-directed care in community aged care has created challenges for providers and older people and their care partners. Initiatives are needed to teach older people and their allies how to make the community aged care system work for them. The introduction of a voucher type system for older people in February 2017 will provide some choice for older people and their allies; however, they will still need to know how to make the system work for them.

Choice and control for older people through long-term care insurance

There is an opportunity to have a different debate about the funding of long-term support for older people and their care partners in Australia. Reflecting on the lessons from the implementation of the NDIS and insurance schemes for long-term care from other countries, it is possible that the funding mechanisms for older people to age well in their communities could be reviewed. This review must include a more rigorous discussion of the positives and negatives of a long-term insurance scheme for older people, how it can be funded (for example, through general revenue or through a Medicare-type levy) and how the funding can ensure flexibility to empower older people and their care partners to age well in their community.

Carrie Hayter is managing director of Carrie Hayter Consulting, a firm specialising in the disability, aged-care and healthcare sectors.

2 comments

I work in the CDC environment and it is extremely difficult for our older people to navigate through and are therefore less likely in some ways to access it particularly if they do not have supportive families.